Prepaid debit cards are loadable payment cards, similar to those used at the ATM and at the checkout that draw from your bank account when used. However, you must deposit the amount of your limit and cannot spend more until you load money onto the card. Ease of use is an advantage to carrying a card over cash, and you are able to make most online purchases. However, there is a way to spend more than your deposit limit, but beware of claims that prepaid debit cards will help you build a positive credit history.
Research prepaid debit cards and look for those that allow you to borrow more than you deposit onto the card. Not all debit cards have this feature, so shop around.
Obtain a list of fees from the prepaid debit card company you choose before you apply. You may have to pay start-up and monthly fees, reload charges, overdraft costs to borrow over your limit and a fee to receive a statement. Other fees, such as those for each transaction, may be involved with the use of the card.
Apply for a prepaid debit card from a company, such as AccountNow, that allows you to spend more than your deposit limit. Ask the company for the amount that you can use.
Keep track of how much you spend over your limit to ensure that your card is not rejected for future purchases.
Load enough money onto your prepaid debit card to repay the amount that you borrowed and enough for more purchases. Some companies take monthly payments from your deposit, so you do not have to pay it back all at once.
Debit cards that guarantee to boost your credit rating may not be reporting to the top three credit bureaus: Experian, TransUnion and Equifax. Instead, they may report to Payment Reporting Builds Credit, or PRBC, which tracks your level of financial responsibility by paying your monthly bills, such as rent and utilities, on time. Therefore, you may not see an improvement in your traditional credit rating, which is used by lenders to determine interest rates and other terms.
- Bankrate; Don't Overpay For Prepaid Debit Cards; Constance Gustke; June, 2010
- CreditNet: Can a Prepaid Debit Card Really Help Me Build Credit?
- CreditNet; Credit for Paying the Bills; Joshua Heckathorn; Sept., 2009
- CCR Now; Why Using a Prepaid Card Won't Help You Rebuild Bad Credit; Rod Miller
- DebitRewards.com: AccountNow Prepaid Visa Card